--- title: Uncashed Distribution Checks? The IRS Provides New Guidance...Sort Of description: All sorts of issues can arise when participants fail to timely cash distribution checks. The IRS has published a ruling provides (some) guidance. image: https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_pp_png_category.png --- [![logo](https://www.dwc401k.com/hubfs/_global/logo.svg "logo")](https://www.dwc401k.com/) [![logo](https://www.dwc401k.com/hubfs/Dwc-2019/SVG/logo.svg "logo")](https://www.dwc401k.com/) [![Contribution Limits](https://no-cache.hubspot.com/cta/default/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4) [![Log in](https://no-cache.hubspot.com/cta/default/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc) [![services-icon1](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon1.png) ## Plan Document A properly drafted document is the foundation of achieving the company's objectives and keeping the plan in operational compliance. ](https://www.dwc401k.com/services/plan-document) [![services-icon2](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon2.png) ## Plan Compliance We have a fundamental understanding of how critical plan compliance is to both the IRS and Department of Labor. ](https://www.dwc401k.com/services/plan-compliance) [![services-icon3](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon3.svg) ## Defined Benefits Services We work with business owners and investment advisors to determine what makes the most sense by providing a detailed cost benefit analysis. ](https://www.dwc401k.com/services/defined-benefits-services) [![services-icon4](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon4.svg) ## Mergers, Aquisitions & Related Company Analysis The DWC team is well-versed enough in the nuances and is ready to help you navigate the situation. ](https://www.dwc401k.com/services/mergers-acquisitions-analysis) [![services-icon5](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon5.png) ## Plan Corrections DWC's extensive experience with both the IRS and Department of Labor voluntary correction programs allows us to help you address just about any accident that might happen. ](https://www.dwc401k.com/plan-corrections) [![services-icon6](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon6.png) ## Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. ](https://www.dwc401k.com/services/government-audits) ![service-right-icon](https://www.dwc401k.com/hubfs/QOTW/March%202020/service-right-icon.svg) ## Investment Advisor Support DWC has a long history of successfully partnering with investment advisors. 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The IRS Provides New Guidance...Sort Of](https://www.dwc401k.com/hs-fs/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_pp_png_category.png?width=800&name=hero_pp_png_category.png) # Uncashed Distribution Checks? The IRS Provides New Guidance...Sort Of [ DWC ](https://www.dwc401k.com/blog/author/dwc) | Published: 08/15/2019 | [News](https://www.dwc401k.com/blog/topic/news), [IRS](https://www.dwc401k.com/blog/topic/irs), [Legislation](https://www.dwc401k.com/blog/topic/legislation), [DWC](https://www.dwc401k.com/blog/topic/dwc), [Plan Distributions](https://www.dwc401k.com/blog/topic/plan-distributions), [Pension Primer](https://www.dwc401k.com/blog/topic/pension-primer) Just about anyone who has dealt with a 401(k) plan – either as a plan sponsor or a service provider – for any amount of time has had to deal with the issue of participants not timely cashing plan distribution checks.  There are all sorts of potential concerns that range from tax implications to fiduciary responsibilities, but neither the IRS nor the DOL have been especially forthcoming with guidance. That changed yesterday…sort of…when the IRS published [Revenue Ruling 2019-19](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&uact=8&ved=2ahUKEwiLtv3pgYXkAhXtqFkKHXUKDooQFjACegQIAhAC&url=https%3A%2F%2Fwww.irs.gov%2Fpub%2Firs-drop%2Frr-19-19.pdf&usg=AOvVaw2WyVz9kJDiK2XmcrWMpAkW) that touches on some of the tax-related questions that come can come up.  We say “sort of” because this ruling has very minimal impact on what we already knew. ## **What are the Issues?** The IRS addresses three questions in the ruling, all centering around whether a participant’s delay in cashing a distribution check until a subsequent year has any impact on when the distribution is taxable.  Here are the three questions: 1. If the participant does not cash the distribution check in the year it is paid, can the participant disregard the distribution amount from his/her gross income for that tax year? 2. Does the failure to cash the check alter the employer’s/plan’s tax-withholding obligations? 3. Does the failure to cash the check alter the employer’s/plan’s obligations to report the distribution on Form 1099-R for the year the of issuance? ## **Getting Down to Brass Tacks** In a word, the answer to all three questions is a resounding “no.”  The ruling provides that if the check is issued to the participant during 2019, those dollars are included in gross compensation, taxable, and reported on Form 1099-R for the 2019 tax year.  When the check is actually cashed has no impact on any of these issues.  And what’s fantastic is it took the IRS five pages to tell us that. So, as we mentioned earlier, there isn’t much to this particular ruling, but we can cross our fingers that it is an initial foray into providing additional guidance on other matters related to uncashed checks. 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